Why new deals no longer pay the best rates: Savers suffer as newly launched savings accounts fail to deliver best rates

Don't be lured into a newly launched savings account, because many of the latest offerings aren’t paying the best rates.

Traditionally, new deals offer top rates. But that is no longer the case - the new Branch Saver from Santander is poor value.

This latest trend marks a particularly confusing time for savers as banks and building societies continue to cut rates willy-nilly for loyal savers in easy-access accounts and cash Isas.

Rates: Don't be lured into a newly launched savings account

But some loyal customers are seeing a small rise. And when the Bank of England base rate does start to rise, things could get more complicated.

Banks and building societies might not pass on the full increase to their hard-pressed savers.

Sue Hannums, at savings advice site savingschampion.co.uk, says: ‘Savers who just sit in an account with the hope of seeing better rates could be disappointed. There is no guarantee your rate will rise in line with any increase in base rate.’

Among the latest cuts is the NatWest Cash Isa, which fell by as much as a third last week.

The rate is down from a tax-free 1 per cent to 0.75 per cent on balances up to £25,000. For larger balances, the rate has been axed from 1.5 per cent to 1 per cent. A year ago, savers with £27,000 or more earned 2.25 per cent.

The bank also halved the rate on its e-Savings account, closed to new customers, from 1 per cent to 0.5 per cent last month.

But BM Savings, part of Halifax, has a new internet-based account - Online Extra Issue 12 at 1.31 per cent, which is among the top rates.

It is boosted by a short-term bonus which vanishes after a year. If you are in older issues of this account, check your rate. You could be earning much less.

These old versions were also paying top rates, including a bonus, when they were launched. But the rate tumbles to 0.5 per cent after a year.

Isa savers with BM Isa Extra Issue 6, which went on sale in June last year at a best-buy rate of 2 per cent, will also see their rate drop to 0.5 per cent after a year.

Other falls include Nationwide Web Isa Issue 1. The rate sinks to 0.5 per cent from as much as 2 per cent at the end of this month.

If you opened Halifax Isa Saver Online at 1.35 per cent a year or more ago, then you earn a pitiful 0.25 per cent. You can more than double your rate simply by switching to the accounts these providers currently offer.

Some Santander Isa savers could also earn as little as 0.5 per cent after taking out its Direct Isa Saver 4 on sale this time last year.

It all depends on how much you have in your account. After 12 months, your Direct Isa Saver 4 changes to the bank’s Isa Saver account. This pays just 0.5 per cent on balances up to £10,000 and 1 per cent up to £25,000. Above this level it’s a better 1.5 per cent.

Other new top-paying accounts come from Kent Reliance at 1.5 per cent. But this is only available through its nine branches.

Don’t get hoodwinked by Santander’s new Branch Saver, which pays just half this rate at 0.75 per cent. There are plenty that pay a better rate.

And swimming against the rate-cutting tide is West Bromwich BS. It has raised the rate on its Websaver Isa to 1.5 per cent, up from 1.45 per cent, to put it up with the top payers. The increase applies to both new and loyal savers.